U.N. Stiffed it for Millions After|Perilous Work in Iraq, Firm Says

MANHATTAN (CN) – A Turkish marine salvage firm says the United Nations refused to pay it the $11 million it’s owed for clearing the Iraqi port of Umm-Qasr of sunken vessels after the onset of the second Iraq War. Tuzla Shipyard claims it completed the work for the United Nations Development Programme despite its employees being taken hostage by extremists and held for 2 months, having its progress compromised by saboteurs and thieves, and having its equipment impounded for more than a year.

Plaintiff Kahraman Safikoglu, Tuzla’s former majority owner, says that after removing 30 vessels from the harbor – some having been submerged there since the 1980s Iran-Iraq War and the first allied effort against Saddam Hussein in the early 1990s – cutting them into scrap and installing pollution control devices at the port, UN officials cited a series of technicalities to excuse their unwillingness to pay. Safikoglu, says that the scrap and environmental programs were UN-requested add-ons that added significantly to the danger and costs of the original contract, seeks $125 million in damages. Tuzla was originally hired to clear Umm-Qasr of shipwrecks by the post-Saddam Government of Iraq, a contract that was subsequently assumed by the United Nations Development Programme. At that point, the UN asked that more work be performed, including cutting the vessels into scrap metal, storing the metal on piers, and buying pollution-control equipment, mostly to satisfy Iraq’s neighbors, including the government of Kuwait. “Tuzla is one of the few companies in the world with the experience, equipment, and ability to perform such a massive and complex project,” according to the federal complaint. Safikoglu says that when the UN took over the contract, it agreed in writing to pay for the work, assured the firm it had the money to do so, and noted that it intended to sell the scrap metal to generate revenue. Safikoglu adds that he was among the Tuzla employees taken hostage, and that during the work, “Tuzla employees were frequently shot at and threatened during the course of their work.” “Yet when Tuzla successfully completed the work, UNDP refused to fulfill the promises it had made to Tuzla and the plaintiff,” the complaint states. “After inducing Tuzla to perform the work on the basis of written promises that UNDP would pay for the work assuring Tuzla that it was a contractor of the UNDP, [the aid agency] then stated that it did not in fact have the funds to pay Tuzla, and that it never intended to abide by the written representations and promises it had made.” To top it off, Safikoglu says, the agency has refused to agree to any means to resolve the dispute, such as arbitration.Safikoglu is represented by Robert C. Sentner, Edward C. O’Callaghan and Sherli Yeroushalmi with Nixon Peabody.